Morning Markets
September E-Mini S&P 500 futures (ESU23) this morning are down -0.04%, and Sep Nasdaq 100 E-Mini futures (NQU23) are down -0.05%.
U.S. stocks are being undercut by weak consumer economic reports over the weekend from China, a weak German IFO report, and geopolitical concerns after Wagner Group’s brief weekend insurrection in Russia.
Stocks are seeing some underlying support from lower global bond yields. The 10-year T-note yield this morning is down -3.7 bp at 3.698%. The 10-year German bund yield is down -4 bp at 2.31%, and the 10-year UK gilt yield is down -4 bp at 4.28%.
Oil prices are up +0.8% this morning on uncertainty about Russia’s stability after the short-lived rebellion on Saturday by Wagner Group leader Prigozhin as his forces were on their way to Moscow before pulling back. Russian President Putin reportedly talked with leaders of Iran and Qatar today on the phone but has not been seen in public since his address on Saturday in which he threatened the Wagner Group with annihilation before the Russian government said it gave amnesty to the group and its leader.
The German June IFO Business Climate index fell -3.0 points to 88.5 from May’s revised 91.5, weaker than expectations for a decline to 90.7. The June IFO current assessment index fell -1.1 points to 93.7, a bit stronger than expectations for a decline to 93.5. The June IFO expectations index fell by -4.7 points to 83.6, weaker than expectations for a decline to 88.1.
Chinese holiday tourism data released over the weekend showed that domestic travel spending during the recent dragon-boat festival was lower than pre-pandemic levels, fueling the narrative that China’s post-lockdown boom is running out of steam. Also, Chinese passenger car sales in June fell -6% y/y, according to China’s Passenger Car Association. Separately, Chinese home sales in June were weak, according to analysts cited by the 21st Century Business Herald.
U.S. stocks continue to be undercut by concern about the Fed’s bias towards higher interest rates. The FOMC, at its meeting on June 13-14, left its funds rate target range unchanged at 5.00%/5.25% but raised its dot-plot forecast to indicate FOMC member expectations of a further +50 bp rate hike by the end of this year. The markets are discounting the odds at 72% for a +25 bp rate hike at the next FOMC meeting on July 25-26 and are almost fully anticipating that +25 bp rate hike by November.
Overseas stock markets are mixed. The Euro Stoxx 50 is up +0.12%. China’s Shanghai’s Composite index today closed -1.48% lower upon reopening after the market holidays seen last Thursday and Friday. Japan’s Nikkei Stock Index today closed down -0.25%.
Pre-Market U.S. Stock Movers
Tesla (TSLA) is down -1.1% in pre-market trading after Goldman Sachs today downgraded the stock to neutral from buy, adding to downgrades last week from Morgan Stanley, Barclays, and DZ Bank.
Meta Platforms (META) is up +0.4% after UBS raised its price target on expectations that AI
will provide a fresh impetus for the stock.
PacWest Bancorp (PACW) is up +5% in pre-market trading after news that it sold a $3.5 billion of asset-backed loan package to Ares Management Corp (ARES), which was a positive factor in the bank’s attempt to boost its liquidity and stave off a run on deposits. The loan package included consumer loans, mortgages, and timeshare receivables.
Pfizer (PFE) is down -2.9% in pre-market trading after news that the drugmaker is halting a trial of its obesity drug danuglipron because of high liver enzymes seen in some trial recipients.
Moderna (MRNA) is up +2.6% on an upgrade by UBS to buy from neutral on valuation and progress on its drug pipeline.
Palo Alto Networks (PANW) is up +1.5% after Morgan Stanley raised its price target to $302 from $255.
Bitcoin (^BTCUSD) is down -0.15% today, adding to the overall -1.8% decline seen over the weekend on some long liquidation pressure after last week’s +17% rally on the recent Wall Street physical bitcoin ETF applications to the SEC. Coinbase (COIN), Marathon Digital (MARA), Riot Blockchain (RIOT), Bit Digital (BTBT) are all down by more than -1% this morning in pre-market trading.
Today’s U.S. Earnings Reports (6/26/2023)
Carnival Corp (CCL).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
